Before we start to dive into the importance of strategy (aka the design element of our framework) for your digital transformation, let us revisit a story from our childhood days, from the brothers Grimm. It very nicely describes the gist of everything that follows in the remainder of this chapter.

There are many morals you could get out of this story. But for digital transformation it is very simple and clear. Do not be the hare! You may think you will grow longer legs and get faster by transforming your organization (despite your various degrees of mounting panic), giving everything you have, leveraging on all the costly digital transformation payday elements (catalysts, reactants, reaction mechanisms, and their representation in products) described earlier. But when you have a competitor like the hedgehog, you will drop dead sooner or later having gained nothing. Instead, be the hedgehog, and find your hedgehog wife! Find something unique that your competitor did not see coming, which will give you the ultimate sustainable advantage in the game you have chosen to play.

After all, you are in this game to win. For me, design/strategy is the most important success factor in digital transformation practice. Therefore, it should come as no surprise that strategy ended up prominently in our applied digital transformation payday framework (see Figure 3.2). Nevertheless, I decided to explain it in this part of the book as I believe it makes much more sense to first understand in detail the key payday accelerators and decelerators before exploring the other digital transformation elements. That way you know what must and can be leveraged in your design/strategy to configure an end‐to‐end path toward your desired target.

My insistence that it is critical to develop a strategy and make decisive choices might sound like theoretical, old‐school business history. Disciples of high‐speed, disruptive market dynamics driven by customer needs—or those who believe that swift, agile execution is the ultimate savior of any business— might think my approach is stodgy or outdated. But believe me, given what I have seen in many digital transformations, it is not. Quite the opposite: To my knowledge no one has reasonably proven in practice that a religious focus on execution alone (as embraced by some wrong agile interpretations) can replace good strategy work. Only through strategy can you reach the goal of developing a lasting competitive advantage rather than some incremental improvements that cannot ever set you apart. Benchmarking or simply going with what your customers ask for at high speed, while relying on the same digital experience and cloud platforms as everyone else, will not be sufficient for the sustainable success of new business models. It will work even less for large corporations with their many frontier, adjacent, and core reactants. A clearly defined strategy and target state is an integral part of embarking on any meaningful digital transformation, this fundamental belief is not as broadly accepted as one would hope for. Consequently, in many digital transformation programs we often see what I consider to be a very dangerous vacuum which has proven to substantially increase the likelihood of a transformation implosion. (The failure rates needs to come from somewhere). Experience has shown that even the best‐running digital transformation machine needs to know where it should be going. Without a clear strategy to win in the marketplace—that is, the search for something that will make your firm unique vis‐a‐vis your competitors, as the foundation of your most certainly long and very painful digital transformation journey—your digital transformation is doomed to fail before you even start. Without strategy, in the best‐case scenario, you will end up executing successfully and then find out that all the money you invested in the process has gained you nothing vis‐à‐vis your competitors. You, as the hare, will meet your hedgehog nightmare.

Why Good Strategy Is Now More Important Than Ever

But do not worry. This is not another strategy book. So do not expect a lengthy elaboration to make my point of what I believe is now the final best way and coolest new framework for developing winning strategies. There have been just too many (Mintzberg, Ahlstrand, and Lampel 1998) and they keep coming. Nevertheless, I obviously have my personal favorite. Based on trying numerous different concepts over more than 20 years of strategy consulting, I have decided to stick to the one that worked best for me and, more importantly, for my clients: the “Play to Win” approach (Lafley and Martin 2013; Martin 2021). But no matter how you decide to develop your own strategy in the end, just do it! I am utterly convinced that the single most likely root cause of destruction for any digital transformation success is not having one at all, which is a (very stupid) choice by itself; “Strategy is not what you say but what you do.” (Martin 2021). But beware! Having a strategy is not the same as a “strategic plan” with endless presentation pages developed by consultants or internal strategists sharing their sophisticated analysis of the past (what is rightly called “boiling the ocean”). This will not help you with forecasting and road‐mapping the future. A true strategy is:

• A creative exercise leading a clear, target‐state ambition and
• a fitting configuration of your integrated business and operating model that
• cannot easily be copied by competitors of whatever current or future flavor.

Therefore, such a winning strategy should define a target‐state that will give you (at least for some time that matters) a sustainable advantage for winning in your chosen marketplace.

This also implies that this strategy cannot be a purely one‐off exercise. The strategy you need to have in place for your digital transformation to succeed and secure its payday has nothing to do with the misconceptions of waterfall‐style strategic planning. Instead, we are talking about a constantly repeated (this is where I agree with the agile disciples) process of hypothesizing a potential winning target‐state together with integrated choices regarding business model and operating model. Through this process, you learn what works and what does not, and then start anew. To be even more precise: You do not need an extra for your digital transformation to succeed, it is the other way round. You need to design your digital transformation so that it fits your overall strategy choices for winning.

The Sense and Nonsense of Digital Strategy

Therefore, it should come as no surprise that the often‐heard request or recommendation for developing a “digital strategy” makes the hair on the back of my neck bristle. Digital strategy is utter nonsense. For me there is no such thing. As explained in earlier chapters, digital has many impacts on accelerating or decelerating your transformation payday. Obviously, you might develop a winning strategy where digital plays a prominent role because exactly these accelerators (after swallowing the impact of decelerators) give you some unique advantage others in the market cannot copy easily. So do not feel pressured by anyone: You might need to revise your strategy for the digital age, but you certainly do not need and should not have a separate digital strategy. It becomes even worse when firms try to develop multiple “strategies” for each and every catalyst we have discussed before—cloud strategy, AI strategy, RPA strategy, cognitive strategy, and so many more. From my perspective you can call these concepts whatever you like, but you are only referring to an implementation approach and plan, which can and should support what you are hypothesizing to achieve with your strategic choices. In most cases I know, that requires several of these concepts working together in combination to build something unique and not easily replicated.